City of New Orleans considers demolishing the World Trade Center

The City of New Orleans is entertaining a new approach in its 12-year effort to redevelop the World Trade Center: demolishing the building.

The Times-PicayuneThe city has concluded that the land beneath the iconic, 33-story building at the foot of Canal and Poydras streets is more valuable without the tower. It believes that the coveted site along the Mississippi River would be more attractive to developers if it were vacant.

"I believe the World Trade Center site offers us the opportunity to create something at this nexus of two great boulevards that really is capable of inspiring everyone around us to greatness," said Sean Cummings, chief executive of the New Orleans Building Corp., which owns the building.

The possibility is a major shift in thinking for the city, which has been trying unsuccessfully since 1998 to develop the building with the World Trade Center organization, which has a lease on the building through 2019 and which has traditionally used the rent collected from other tenants to fund its trade efforts. Critics say previous development efforts have been needlessly complex.

Any deal to terminate the lease would have to be ratified by the boards of both groups and come before the City Council. If the demolition idea -- or, more likely, the careful dismantling rather than dynamiting of the building given its delicate location on the Mississippi River levee -- gains traction, the City Council, mayor and various permitting agencies would need to sign off on the plan.

Discussions come at a pivotal time. Cummings, a hotel developer and mayoral appointee, may be nearing the end of his term and is eager to have something to show for seven years of work on the World Trade Center issue, especially since he is also in charge of the "Reinventing the Crescent" master plan to revitalize the New Orleans riverfront. A new mayor and city council could be the ones to hear a deal, depending on when agreements are reached. And the World Trade Center organization, which has been losing money and losing members in recent years, is eager to get back to talking trade, but also wants to be adequately compensated for releasing the building.

Talk of demolishing the building is painful to members of the World Trade Center organization, who are proud that they developed the site in the 1960s, paid off the building's bonds and turned a run-down area into a place worthy of luxury hotels, shopping, and a casino.

"We don't subscribe to that notion. It is an iconic building," Constance Charles Willems, an attorney who is president of the World Trade Center organization, said of the demolition idea.

Willems said her group is trying to focus on the financial aspects of terminating the lease to get a deal done, rather than the emotional tug of the building where it has maintained offices since 1967. The group will leave the future of the building to the city. "Our negotiations are ongoing at this point. Lately, I think there's a good spirit of cooperation and resolve," she said.

But Patrick Egan, a commercial real estate appraiser who is executive vice president of Latter & Blum Inc. Realtors, said dismantling the building should be considered. "I think it's at a point where that should be an option in the discussion," Egan said.

Right now, there's more than three million square feet of empty space downtown, much of it in buildings that either can't be demolished for historical or business reasons or in buildings that are better candidates for redevelopment than the trade center. At 670,760 square feet, the World Trade Center is large and its x-shaped footprint is challenging to make workable.

Meanwhile, Egan said, little financing is available for commercial real estate projects nationally and there no demand for new hotel rooms, office suites or condominiums downtown. "If I gave you some of these buildings downtown, and said, 'They're yours for nothing,' what would you do with them?" he said.

A May 2009 appraisal that Egan performed on the World Trade Center pegged the value of the building at $10 million. But with vacant land downtown selling for between $200 and $300 a square foot at sites not nearly as valued as the trade tower's prime riverfront location, the cleared site of the building's 82,230 square-foot footprint would sell for somewhere between $16.4 million and $24.7 million.

Until recently, the World Trade Center group and the New Orleans Building Corp. have been far apart in their discussions, according to materials received through a public records request.

The trade group has asked for a $6.2 million payment to terminate its lease of the building: $5 million that it was supposed to receive from the most recent failed redevelopment efforts, plus the $1.2 million lease termination payment that the Bureau of Government Research had suggested in a report last year.

Willems said her group has lost money by having to move out all of its tenants in preparation for redeveloping the building, and that it is owed money from having to pay for attorneys fees in the redevelopment efforts and things like upgrading the sprinkler system when the city didn't have the cash.

Cummings, meanwhile, would like to pay the group $1 to $2 million to vacate its lease. Under his proposal, the city would pay the group $1 million it has been owed since 2002, and a $1 million termination payment if the group is willing to leave quickly and support a request to the city for $8 million to demolish the building, which he calls "functionally obsolete."

Cummings said that the city doesn't owe the trade group anything else, since the city has already given the group tens of million of dollars of subsidies in the form of use of a building that doesn't pay property taxes, and the cost of the failed redevelopment efforts. Cummings says that what both parties need most is a fresh start, and that the building is worthless.

"No one anticipated this reality 50 years ago when the WTC built this major building and when the City gave up all tens of millions of dollars in rent and real estate taxes. It is just an unfortunate reality with which we must honestly deal," Cummings wrote Willems in November 2009.

Cummings isn't the only one who can envision something other than the trade tower at the foot of Canal Street.

A report released in January by the New Orleans Strategic Hospitality Task Force, which believes that the future of the tourism industry lies in developing the riverfront, depicts the "Tricentennial Plaza Welcome Center" and "Expanded Spanish Plaza Public Garden" in the spot where the World Trade Center building now sits.The task force that the map in the glossy report is meant to be illustrative of the potential along the riverfront and is not meant to say anything definitive about the future of the World Trade Center.

Rebecca Mowbray can be reached at rmowbray@timespicayune.com or 504.826.3417.